Is the Porsche IPO set to turbo-charge the stockmarket?


Porsche's turbo-charged IPO, offsets on the agenda as rates rise, and pensioners hit the headlines. Here are five things you may have missed this week.

Porsche set to turbo-charge stockmarket

Volkswagen has come a long way from the days of the Beetle (who can forget the dak-dak?).

porsche ipo frankfurt stock exchange

VW merged with sports car maker Porsche over a decade ago, and while not all of us can scrape together the $84,000-plus for Porsche's top-selling Macan, it could soon be possible to own a slice of the Porsche brand.

This week saw VW announce plans to list Porsche on the Frankfurt Stock Exchange. The initial public offering could be worth up to 85 billion euros ($A126 billion), potentially making it the biggest new listing in German history.

Some market commentators feel VW's timing may be out of kilter as luxury brands Aston Martin and Ferrari have recently experienced stalling values.

Nonetheless, Australian investors with access to overseas share markets may be able to drive away with directly held Porsche shares. It's also a fair bet Porsche shares will find their way into a variety of exchange traded funds.

Offsets jump in popularity as rates rise

Home owners are embracing offset accounts to make their mortgage work harder.

Over the past 12 months, Australia's largest home loan lender - CommBank, has seen demand for offset accounts jump by about 10%, with a similar rise in the cash balances held in home loan offsets.

An offset is an everyday account linked to a home loan. Instead of being paid interest on the account, the balance is deducted from (or offset against) the value of the home loan when monthly interest charges are calculated, helping borrowers save on interest costs.

The Commonwealth Bank's Executive General Manager Home Buying, Dr Michael Baumann, says the growing use of offsets is a sign borrowers are "looking for ways to better manage their finances in the current environment".

According to CommBank, a borrower with a $500,000, 30-year home loan with a rate of 4.50%, who starts with $10,000 in an offset account and adds $100 every month, could save in excess of $60,000 in interest over the life of the loan.

5% deposit scheme helps first home buyers

The First Home Loan Deposit Scheme - now the Home Guarantee Scheme (HGS), allows first homebuyers to get into the market with 5% deposit and zero lenders mortgage insurance.

New data from the National Housing Finance and Investment Corporation (NHFIC), which oversees the scheme, confirms that the HGS has allowed buyers who could otherwise struggle to get into the market, reap the rewards of home ownership.

NHFIC found:

  • First homebuyers using the HGS have a median household salary of $84,000 compared to $95,000 across the broader first homebuyer market.
  • Buyers under the HGS have purchased their home with a deposit typically around $34,000, compared to $122,000 among other first homebuyers. 
  • Less than 30% of HGS participants' income goes towards mortgage repayments for their first home, compared with 31.6% of income previously going to rent. 

The downside of the HGS is that a 5% deposit doesn't leave much room for property values to fall before the mortgage outweighs the value of a home.

With property prices nationally down 3.4% over the last quarter - and further falls expected, this could be an issue for recent buyers.

Pensioners encouraged to downsize

It's been a big week for age pensioners.

First, the news that from September 20 the maximum Age Pension will jump by $38.90 fortnightly for singles, and $58.80 for a couple combined. It's the biggest increase in almost a decade.

In addition, the Albanese Government is aiming to introduce legislation that will give pensioners an extra 12-month assets test exemption on the proceeds of a home sale before pension payments are impacted.

The aim is to get more seniors to downsize, freeing up housing stock for younger families. Only around 8,000 pensioners downsized last year.

Minister for Social Services Amanda Rishworth says, "We don't want people putting off downsizing because they are concerned about the impact it could have on their (pension) payment rate and overall income."

However, it may not be enough to tempt seniors to downsize.

Research by the Australian Housing and Urban Research Institute found many older homeowners simply don't want to leave a much-loved home.

In addition, high property values can see pensioners left with a substantial cash pool even after buying a smaller home, which brings the risk of losing their Age Pension altogether.

Work for longer? Count me in!

Six out of 10 Australians would rather work longer than adjust their expected standard of living in retirement according to AMP's latest Financial Wellness Report.

It found most of us are flying blind when it comes to retirement, with almost half of working Australians unsure about how much they need to save for retirement.

Planning to work for longer is good in theory, but it's not a sure thing.

Australian Bureau of Statistics figures show Australians plan to retire, on average, at age 65.

In reality though, the average retirement age is closer to 55, with retirement often bought on prematurely because of ill health or disability.

It's a good reason to stay focused on growing super especially as we inch our way towards retirement.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.